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The move followed skeptical comments from Tesla CEO Elon Musk, Treasury Secretary Janet Yellen and Microsoft (MSFT) co-founder Bill Gates.
Prices stabilized around $ 48,000 early in Tuesday’s trading, but it’s still over 10% lower from Monday’s levels.
But even Musk is starting to worry about the surge in bitcoin, noting
a tweet on Saturday that he thought the prices of bitcoin and ethereum, the world’s second largest cryptocurrency, “appear high.”
On Monday, Yellen, former chairman of the Federal Reserve, also cast doubts.
Speaking at the New York TImes DealBook conference, Yellen said bitcoin is “an extremely inefficient way to transact” and expressed concerns about its wild price swings.
“It’s a highly speculative asset, and I think people should be wary. It can be extremely volatile, and I’m worried about the potential losses investors might incur,” Yellen said.
Gates’ negative comments didn’t help either.
In an interview with Bloomberg, Gates said Musk and Tesla have one thing to invest in bitcoin, but that doesn’t mean average investors should go that route.
“I think people are bought into these fads, which maybe don’t have as much money to spend, so I’m not optimistic about bitcoin,” Gates said.
“My general thought would be if you have less money than Elon you should probably be careful.”
And in case you keep the score at home, everyone except Amazon (AMZN) CEO Jeff Bezos has less money than Elon – including Bill Gates.
It’s also worth noting that Gates, like his good friend Warren Buffett, has been bearish in bitcoin for some time – a position that average bitcoin investors could have lost a lot of money to if they had listened to him.
In fact, Gates said in 2018 that he would cut down on bitcoin if there was an easy way to do it. The cryptocurrency was trading under $ 10,000 at the time.
Despite the recent pullback, bitcoin prices are still up over 65% so far in 2021.
This dramatic surge sounded the alarm bells for many on Wall Street, reminding some seasoned strategists of previous market bubbles and speculative frenzies.
“While bitcoin has gained significant credibility in recent months due to interest from institutional investors,” Kristina Hooper, chief global market strategist at Invesco, said in a report Monday, “it could still be the digital equivalent of ‘tulip mania’, which seized Holland in the 1600s and sent the price of tulip bulbs to astronomical and unsustainable levels before their inevitable crash. ”
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